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Putting the future on the high (skills) road.

America faces a low-wage future unless schools and businesses upgrade workers' skills to compete in the changing world economy.

Richard Yarborough, a 55-year-old assembler, has worked nearly 30 years for General Motors. The job he landed right out of high school paid him well enough to provide for several cars, vacations and a house, and enabled his wife to stay at home with their three children.

Kyle Kulwicki is a 19-year-old high school graduate who is not going to college and has no idea what he will do next. He cannot hope for a job like Yarborough's. The local GM plant is closed. And, given the thousands of layoffs of senior GM employees, he would have virtually no chance of being hired in any case. He is making ends meet by taking short-term, low-wage jobs he doesn't like in shopping malls, department stores and convenience outlets. The high wages and workplace security Yarborough's generation took for granted are the stuff of fading memory for Kulwicki and his friends.

The defining issue of the 1992 presidential election was the danger posed to our economy by the federal budget deficit. Comparatively little was said about how changes in the world economy are fostering another deficit--one in the skills required of the American workforce. This deficiency stems from the inability of most workers and students in this country to meet the increased social, operational and analytic demands of a new kind of "high performance" workplace that will soon supply the lion's share of high-wage jobs here and around the world. A high performance firm operates on the principle that front-line employees, closest to and most familiar with the production process, are best-suited to monitor input and output, administer work teams, and recommend changes that will lead to increased quality, reduced costs and greater efficiency.

If we do not find ways to train our workers for these new skills, Americans like Kyle Kulwicki will be relegated to jobs and salaries far below what their parents made.

The World Comes to America

For decades, American employers could afford to pay high wages for unskilled labor. The unchallenged dominance of U.S. firms in the domestic market meant escalating labor costs could be passed on to consumers. The use of advanced technology, combined with the return to the workforce of millions of World War II veterans, followed in turn by baby boomers and women, had a hot-house effect on productivity. The nation's wealth, estimated at $700 billion in 1946, exploded to $1.7 trillion in 1958.

Even as America's domination of the world economy peaked in the late 1950s and early 1960s, cracks began to appear in its previously solid foundation. The trickle of imported products became a stream, then a flood, increasing consumer choice, reducing prices and ending American command of the home market. Advances in communication, transportation and production technology enabled firms to operate far from their traditional supplies of labor and raw materials. This led to the export of low-skilled jobs from Detroit, Pittsburgh and the southern United States to Mexico, Taiwan and Brazil at wages far below what Americans were used to.

The Importance of High Performance

Thirty years later, the days of high-paying jobs for low-skilled workers have passed. Today's workers and future generations of workers must have specialized skills and the ability to learn. So far, our nation is behind in developing this new kind of worker.

Much of our human potential is squandered before it has a chance to set foot in a workplace. Little is done to recover the roughly one-quarter of American students who drop out before their class graduates from high school. For the 40 percent of high schoolers who do graduate, but don't go on to attend or complete college, a disproportionate focus on college prep coursework in secondary schools leaves them poorly prepared for the world of work. With few skills and little knowledge of the environment they are entering, Kulwicki and many of the 20 million dropouts and noncollege-bound graduates who comprise the "forgotten half" will wander in and out of unemployment from one low-paying job to another, sometimes for years, before gaining a toehold on a career ladder that might lead to better things.

Although it is a necessary step away from the low-wage abyss, skill development is pointless unless companies offer skilled workers the opportunity to use their full range of abilities.

Toyota pioneered the use of the high performance workplace in the 1960s and saw its once maligned products become benchmarks for world-class standards of quality. The lessons learned from its metamorphosis have been applied by a pioneering group of well-regarded American companies, including Xerox, Motorola, Ford and Saturn.

What Toyota developed was a workplace where assembly line workers become dynamic teams responsible for many tasks and for solving problems. Building these efficient teams is not simple. Workers need to be taught a wide variety of skills so that tasks can be rotated and team members can fill in for each other. They also must acquire many additional skills: simple machine repair, quality-checking, housekeeping and materials-ordering. Then workers need encouragement to think actively so they can devise solutions before problems become serious.

While much of the success of Toyota and its American imitators is due to the broadly skilled workforces they have developed, these firms also have taken the essential concurrent step of upgrading organizational capacities to accommodate employees of increased ability and responsibility.

To date, few other companies have taken similar measures, which helps explain the lack of urgency surrounding this subject, and why, like an iceberg, the threat of the skills deficit remains largely hidden.

American businesses have been able to resist change because the vast majority are designed to take advantage of a low-skilled workforce. Productivity levels remain high, especially in the manufacturing sector. This performance, especially over the past decade, has been based in large part on conditions that will be difficult to duplicate over the long haul--more people entering the workforce (especially women, whose participation rate has nearly doubled since 1950), working longer (our average 1,900-hour year trails only Japan) and using more advanced technology (no longer a U.S. monopoly).

Into the Future with Tools of the Past

We have chosen to work harder, not smarter. As a consequence we are sowing the seeds of a low-wage economy. As former Labor Secretary Ray Marshall and training expert Marc Tucker point out in Thinking For A Living, "If we continue to compete with |low-wage countries~ on the basis of hours and wages--which is what we are now doing--then our wage rates will decline and our hours will increase until they match those of the low-wage competition."

Whether they are fresh out of school or plant veterans, America's front-line workers receive little training that would distinguish them from their low-wage competition. Just 0.5 percent of all the firms in this country account for 90 percent of the $30 billion employers spend on training each year, and most of this goes toward upgrading managers, engineers and others with college degrees. New front-line hires in the auto industry receive about 50 hours of training in their first six months of work, compared to over 300 hours for their counterparts in Japan.

This training gulf exists because most American workplaces have been designed to accommodate, and even encourage, the use of low-skilled employees. The Commission on the Skills of the American Workforce has reported that 95 percent of businesses continue to operate under old forms of work organization.

Many of these establishments still adhere to the "Taylorist" methods Henry Ford first used to build his Model T some 75 years ago. This system, as perfected by engineer Frederick Winslow Taylor, accommodated the largely immigrant and rural labor forces of the early 20th century by breaking complex procedures down into a series of simple tasks.

A defining feature of Taylorist systems is thick layers of management that plan and administer operations, diagnose problems and issue orders to front-line workers. Acting as a communications channel from the executive suites down to the assembly line, these middle managers and the bureaucracy they spawn are inviting targets for reformers intent on making U.S. business lean enough to compete in international markets.

The American Way--for a Change?

Systems designed for minimally skilled, entry-level employment are increasingly ill-suited for America today. Though it made possible our industrial superiority for much of this century, Taylorism has proved too cumbersome to permit the quality control, rapid product changes and small production runs necessary to satisfy global customers who prize excellence and variety above everything else.

Our crisis springs from the fact that we are not ready to implement systems that would assure us of maintaining our standard of living and provide opportunities for millions of current and future workers. If just a few high performance organizations were suddenly to appear overnight, we wouldn't be ready to provide workers for them. Former Labor Secretary Bill Brock summed up our current predicament: "The good news is that there is no shortage of skilled labor in the United States. The bad news is that there is no shortage of skilled labor in the United States." Stated another way, we are getting away with our present workforce only because we are short of high performance firms that demand highly skilled workers.

To participate in a high-wage economy, businesses must have a reliable supply of able new entrants and upgraded current workers. Students and employees, however, will not build skills that could price them out of a low-skill market until they know workplaces are ready to use their upgraded talents. The symbiotic nature of the skill development process makes it impossible for either businesses or schools alone to make the system changes necessary for a high-wage workplace.

A New Role for Washington

The active involvement of a third party--government--may help bring businesses and schools together to develop the modern workforce we need.

President Clinton appears willing to broaden the scope of federal employment and training programs beyond their traditional role of providing "second chance" assistance. This expansion is likely to include the development of nationwide standards and guidelines for education and training and retraining services aimed at making students and workers more competitive in the world economy.

Beginning with the Manpower Development and Training Act of the 1960s and continuing through the Comprehensive Employment and Training Administration of the 1970s to today's Job Training Partnership Act, federal programs have targeted virtually all their assistance at disadvantaged categories, ranging from the disabled to dropouts to minorities to youth to dislocated workers. Until recently, the federal government has done little to address the skills needed by new entrants to the workforce, as well as those already on the job.

National governments in other industrialized countries perform their share of safety net functions, but they are also active in providing training and employment opportunities to current and future workers.

Youth apprenticeship systems like those used in several European nations have become models for fledgling state programs. Sweden's national labor board helps prospective workers find employment anywhere in the country and pays for training, if necessary. Unlike the practice in most American companies, where employee training ends upon hiring, firms in many European countries and Japan continually upgrade the skills of workers on the job.

Early signs indicate that the Clinton administration, while maintaining the current federal safety net, is ready to include European-style training in the federal program. As governor of Arkansas, Clinton pushed for adoption of a dozen youth apprenticeship programs around the state. Other Clinton-era initiatives in Arkansas that show his interest in improving the workforce include teacher salary increases, early childhood education, adult literacy, magnet schools, college scolarships and a system of technical centers designed to improve access to academic and and vocational training programs.


A Blueprint for Improvement?

The Education and Labor departments have unveiled a tentative outline for a federal youth apprenticeship program. A basic "three R's" curriculum would extend through 10th grade, followed by an 11th- and 12th-grade focus on communication skills, analytical thinking and problem-solving. Pupils in these grades would be encouraged to combine their classroom studies with work-site internships. A more specialized 13th grade would concentrate on technical and professional learning in a chosen field.

Students would receive a certificate of mastery upon graduation. Business would be closely involved in developing standards for certificate exams. Consistent standards would make certificates awarded in one state recognized in any other. Funding for the program would grow from $270 million in 1994 to $500 million by 1997 for a four-year total of approximately $1.2 billion.

Compared to current federal youth apprenticeship efforts--conducted primarily through 20 pilot projects around the country--this multiyear, billion-dollar-plus proposal affecting thousands of students represents a huge jump in school-to-work transition programs in this country.

By European standards, however, it's nothing to boast about. German employers invest $17 billion a year in training 1.6 million young people, 16 to 18 years old.

Putting Training in the Workplace

In addition to what they spend on training new workers, German firms devote some $18 billion a year to upgrade the skills of employees already on the job.

Most American firms, if they train at all, allot considerably less time and money. The American Society for Training and Development estimates that only one in 14 American workers has had any formal training from an employer. On the campaign trail, Clinton called for closing this gap with a requirement that firms with more than 100 employees put 1.5 percent of their payroll into training or pay a similar amount into a central training fund.

This is more than many companies now devote to training, but less than what the most efficient American firms and the international competition spend. Paragons of high performance like Xerox, Motorola and Hewlett-Packard spend 3 percent of payroll or more on training. Many Japanese firms edge the 6 percent mark.

By one estimate, Clinton's requirement would add $17 billion to the $30 billion firms already spend on training. The plan would require training resources to be distributed throughout the workforce, avoiding the current practice in which most training goes into upgrading the abilities of already-skilled managers and engineers.

The Clinton education and training proposals may be bold by American standards, but, by world standards, the United States has spent decades on the sidelines. We have plugged the dike so long our fingers are nearly stuck. We must move on both the demand and supply sides of the skills equation, adopting high performance organizations as rapidly as possible. At the same time, we must educate, train and retrain students and workers to the higher standards necessary for these systems. This is a tall order, but we have little choice. Continued reliance on minimal-skill systems will, in the long run, relegate us to a contest where "winning" means lower wages, longer hours and a greatly reduced standard of living.

Only by building firms that welcome highly skilled employees will we be able to provide acceptable economic opportunity to these millions of future workers.

States Look at Youth Apprenticeships

Some two dozen states have developed fledgling youth apprenticeship programs with one eye fixed on Europe and the other on future work-force needs.

Each year millions of European teen-agers make a smooth transition from school to work through programs, like Germany's Dual System, that alternate classroom learning and on-the-job training in actual workplaces. The programs provide a skills-intensive education that leads to credentials recognized by employers nationwide.

Compared to Europe's systems, America's school-to-work efforts are new, enroll few students and are concentrated among a relative handful of employers. They represent the first steps, however, toward the goal of exposing large numbers of American students to the world of work before they graduate from high school.

As part of its wide-ranging 1991 human resource development package, the Oregon legislature passed a Youth Apprenticeship Pilot Program to place 11th and 12th graders in existing apprenticeship systems. Two years later, 30 high school students statewide are enrolled in traditional apprentice fields, such as building trades and graphic arts.

Employer-paid wages are compensated by tax credits. Apprentices are placed by teachers, administrators and professional technical regional coordinators, who also administer adult apprenticeships. Students may spend no more than 20 of their combined 40 school and employment hours per week on the job, though most are expected to work less than that.

Problems facing the program include a lack of knowledge about its existence and difficulty placing students in the state's extensive rural areas. To allay fears that apprentices would be rigidly "tracked" into vocational fields and away from college, elements of a standard curriculum are maintained. Students have the option to leave the program whenever they wish.

In 1991 the Wisconsin Legislature approved a School-to-Work Transition Initiative incorporating a technical preparation curriculum combining the last two years of high school and the first two years of college; a 10th grade Gateway Assessment to be administered to all students to determine their academic progress; and European-style youth apprenticeships for high school students.

Students enter the program as 11th graders and work in the summer between their junior and senior years. Apprentices receive dual credits applicable to both high school and technical colleges or universities. These credits confer them with advanced placement should they continue postsecondary education. Along with a traditional diploma, graduates receive a Certificate of Occupational Proficiency from the Department of Labor, Industry and Human Relations.

Scott Liddell monitors workforce development issues for the NCSL employment and training program.
COPYRIGHT 1993 National Conference of State Legislatures
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Title Annotation:The Problems of Poverty; includes related article; upgrading workers' skills
Author:Liddell, Scott A.
Publication:State Legislatures
Date:May 1, 1993
Previous Article:The evolving economy.
Next Article:What to do with welfare?

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